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- The Need for Retail Investor PR
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- Public relations (PR) is “the management of communication between an
organization and its stakeholders.”
- Investor Relations (IR) is “a strategic management responsibility th=
at
integrates finance, communication, marketing and securities law
compliance to enable the most effective two-way communication betwee=
n a
company, the financial community and other constituencies, which
ultimately contributes to a company’s securities achieving fair
valuation.” (http://www.niri.org)
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- Investor Public Relations is vital to a company’s financial success,
especially now that intangible assets – such as management quality,
product quality, and innovativeness – comprise so much of a company’s
worth.
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- The more a company makes investors aware of its existence and busine=
ss
strategy, the more likely it is to increase sale of its stock.
- Investors have a limited amount of time at their disposal. They wil=
l,
therefore, invest in those companies they have heard of, are famili=
ar
with and can trust.
- When a company is willing to communicate, it decreases investors’ s=
ense
of uncertainty and risk. This is true for both institutional and re=
tail
investors.
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- Public corporations have many different approaches to investor
relations.
- Some view it as largely reactive with delegated people to respond to
inquiries from analysts or investors as they come in.
- Others implement a comprehensive and proactive investor relations
approach.
- In today’s environment, a strong proactive IPR is recognized as
providing significant advantages.
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- A retail investor, also called individual investor or small investor=
, is
an individual who purchases small amounts of securities for his or h=
er
personal account and not for another company or organization.
- An institutional investor is an entity with large amounts to invest.=
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- The primary IR program for most corporations target institutional
investors. They do hold the majority of shares.
- Regardless of company size or sector, however, an effective program
aimed at communicating to and supporting a company’s retail investors
can be an important adjunct to the primary IR program targeting
institutional investors.
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- Individual investors have acquired a strong role as providers of
capital.
- The rise in the scope and reach of U.S. private equity ownership has
been striking.
- In 2002, approximately half of U.S. households owned equity, up fro=
m 19
percent in 1983.
- Stock investing by individual households is projected to rise to 74
percent by 2009.
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- Retail investors are a growing segment.
- “Individual investors are probably the most ignored demographic --
companies typically court analysts at primaries and institutional
investors. But the buying power of retail investors is as strong, if
not stronger.”
- Leo Hinkley, VP of IR and Corporate Communications, BankAtlantic
Bancorp
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- The retail investors tend to take a longer-term approach to ownership
(long-term holding), providing greater stability and loyalty within =
the
shareholder base.
- Increasing the number of retail investors reduces concentration of
ownership.
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- The liquidity is low for the institutional market.
- They have maximized the institutional route.
- They want to tap all sources of demand.
- Their ownership is too concentrated.
- They want more shareholders.
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- Cost of marketing
- Cost of servicing
- Time required to attract a significant holding
- Geographically diversified market
- Hard to reach a concentration of real investors
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- Media relations is critical to reach the retail investors.
- Strategically launch effective programs at the right time with the r=
ight
message.
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- Investor
- Public Relations
- Navigator SystemTM (patent pending)
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